Courtney Dunbar Jones

This U.S. Tax Court case involved petitioner Charlton C. Tooke III challenging an IRS Independent Office of Appeals determination in a combined collection due process hearing that rejected his proposed offer-in-compromise and installment agreement and sustained a notice of federal tax lien for 2013-2017 plus proposed levies for 2012-2017 to collect unpaid self-assessed income taxes. The court first dismissed the 2012 levy issue as moot. On the remaining issues, the court granted the IRS's motion for summary judgment and denied the petitioner's, holding that Appeals did not abuse its discretion because the administrative record showed proper evaluation of the petitioner's financial information under national and local standards, rejection of unsubstantiated expense deviations, and a valid balancing of collection needs against intrusiveness. The court sustained the lien and levy actions for the taxable years at issue.

taxes

This U.S. Tax Court case involved petitioners James and Colleen Sullivan challenging IRS deficiencies for 2017-2019, specifically whether their activities through Traders Abacus, LLC (software development and home construction on a Maine property) and a 2019 mulching business called Leaf-Cutter qualified as for-profit endeavors under IRC section 183, allowing deduction of related expenses. After trial on the profit-motive issue, the court held that the software development activities were conducted for profit, the home construction expenses were deductible to the extent of 75% (allocating the remainder to personal use based on land area, personal residence, and recordkeeping issues), and the Leaf-Cutter mulching activities lacked a profit motive. The decision rested on an evaluation of the Sullivans' background, extensive self-taught experience in construction and engineering, documented efforts and investments, credible testimony about business goals, actual sales profits from developed property, and the absence of similar profit indicators for the mulching venture. Related accuracy penalties under section 6662 and expense substantiation were reserved for later proceedings.

taxesbusiness & regulatory

In this U.S. Tax Court case, petitioner Asia Zaheen sought equitable relief under Internal Revenue Code section 6015(f) from joint and several liability for a 2019 federal income tax deficiency and accuracy-related penalty arising from a joint return filed with her soon-to-be ex-husband and intervenor Kamran Ehsan. The court granted Zaheen full relief after finding that she had been subjected to financial control and abuse by Ehsan, lacked meaningful involvement in or knowledge of the tax understatement, and would suffer economic hardship if held liable. The decision rested on weighing multiple equitable factors under Revenue Procedure 2013-34, including marital status, economic hardship, lack of significant benefit, and mental health impacts, which collectively made it inequitable to hold Zaheen responsible.

taxesfamily law

The case concerned taxpayers who claimed deductions under IRC section 162 for payments made to captive insurance companies and a related reinsurer on their 2013 through 2016 returns. The IRS disallowed the deductions and asserted accuracy-related penalties, including under the codified economic substance doctrine in sections 6662(b)(6) and 7701(o). Following earlier decisions that the arrangements did not qualify as insurance for tax purposes, the Tax Court held that the economic substance doctrine was relevant and that the taxpayers were liable for the penalties at the increased rate under section 6662(i), as well as remaining accuracy-related penalties, because they lacked reasonable cause and should have recognized the transactions as too good to be true given their sophistication.

taxesbusiness & regulatory

This Tax Court case involved a company, Middle Department Inspection Agency, seeking review of an IRS Appeals determination that rejected its offer-in-compromise to settle unpaid excise taxes arising from failure to meet minimum funding standards for its defined benefit pension plan over 18 years and sustained a proposed levy to collect the liability. The parties filed cross-motions for summary judgment. The court granted the IRS's motion, holding that Appeals did not abuse its discretion because the offer was below the reasonable collection potential calculated from the company's assets and income, and acceptance would not serve public policy given the extended period of noncompliance with funding rules. It also found no procedural errors in the CDP hearing process and noted that the company had conceded the balancing analysis under section 6330.

taxesbusiness & regulatorylabor & employment

This U.S. Tax Court case involved petitioner Joseph R. Gottesman challenging IRS determinations of federal income tax deficiencies and civil fraud penalties for tax years 2009 through 2012. The court granted the Commissioner's motion for summary judgment and denied Gottesman's motion to stay proceedings. The decision rested on deemed admissions from the Commissioner's answer due to Gottesman's failure to respond, his failure to file a response to the summary judgment motion despite extensions, and the conclusion that the government's interest in resolving the civil tax case outweighed any burden from a related criminal investigation. The court also found the stay request untimely and effectively sought an indefinite delay while Gottesman avoided arraignment on criminal charges.

taxescriminal lawprocedure

The case involved petitioner Adrienne Mennemeyer challenging an IRS notice of deficiency for her 2018 federal income tax return. The primary issues were whether the statute of limitations had expired before the notice was issued, whether a $1.51 million settlement from a FINRA arbitration against her former employer PNC was taxable income, whether certain expenses from her antique mall business were deductible, and whether she was liable for an addition to tax for late filing. The Tax Court held that the notice was timely, the settlement proceeds constituted taxable income because they arose from employment-related claims rather than personal physical injuries, the claimed business deductions were not substantiated as ordinary and necessary, and the addition to tax applied because there was no proof of a timely extension request. The court therefore sustained the IRS determinations as limited by the parties' concessions.

taxesbusiness & regulatory

The case involves Joanne Salvi Vanover petitioning the U.S. Tax Court for relief from joint and several liability on federal income taxes from joint returns filed with her former husband for 2017 and 2018. The court granted partial relief under IRC section 6015(c) for understatements attributable to the intervenor in 2018 but denied relief under sections 6015(b), (c), and (f) for all other items, including underpayments in both years. The decision was based on an analysis of factors such as the petitioner's knowledge of the tax issues, her role in financial management, and compliance with tax laws, determining that relief was appropriate only for specific erroneous items of the former spouse.

taxesfamily law

In this U.S. Tax Court case, petitioner Charlton C. Tooke III sought review of a Notice of Determination sustaining IRS collection actions, including a federal tax lien and proposed levy, for unpaid self-assessed income taxes from 2012 through 2017 after a collection due process hearing. The petitioner filed motions asserting that the IRS Independent Office of Appeals, its Appeals Officers, Team Managers, and Chief violate the Appointments Clause and separation of powers due to improper appointments and removal restrictions. The court denied the motions, ruling that the petitioner lacked standing to challenge the Chief, and that Appeals Officers and Team Managers are not Officers of the United States. The decision followed precedent in Tucker v. Commissioner, concluding these roles do not involve significant authority because their determinations are subject to higher review.

taxesfederal power

This U.S. Tax Court case involved petitioner Yagoub Tibin challenging an IRS deficiency determination for his 2020 federal income tax return. Tibin, the sole owner of TM Transportation LLC, a medical transportation business, was alleged to have underreported flowthrough income from the business and from Lyft, while also claiming various Schedule C business expense deductions. After reviewing stipulations, tax filings, and evidence at trial, the court found that TM Transportation had $250,000 in gross receipts (some of which had been reported) and that Lyft income was already reported on the return; it further held that Tibin substantiated entitlement to an additional $13,078 in deductions beyond those conceded by the IRS, while rejecting unsubstantiated claims such as $78,900 in office rent due to lack of documentation. The decision was based on the taxpayer's burden to substantiate income and expenses under the Internal Revenue Code, with partial application of the Cohan rule for estimates where a reasonable basis existed.

taxesbusiness & regulatory

The case involves Michael H. Shaut challenging an IRS determination of a federal income tax deficiency for the 2019 tax year. Shaut sought deductions for alleged theft or casualty losses from investments in a company he described as a Ponzi scheme, legal fees as business expenses, and a net operating loss carryforward, while disputing an accuracy-related penalty. After concessions by the parties, the Tax Court sustained the IRS's deficiency and penalty determinations. The court reasoned that Shaut failed to provide sufficient evidence to substantiate the claimed losses or NOL, citing inconsistencies in his prior tax returns and lack of proof regarding the nature of the investments and related expenses.

taxesbusiness & regulatory

This U.S. Tax Court case involved Robert Dean Mazotti and Debra Lea Jones-Mazotti challenging IRS determinations of federal income tax deficiencies for tax years 2018, 2019, and 2020, along with accuracy-related penalties. The primary issues were whether Ms. Jones-Mazotti's writing and research activities qualified as a for-profit business under the tax code, allowing deductions for associated expenses on Schedules C, and whether the couple was liable for section 6662 penalties. The court held that the activities were not engaged in for profit, based on factors including the lack of a business plan, decades of claimed losses without profit until 2022, inconsistent testimony on publishing efforts, and deductions for personal expenses such as vacations and home improvements. It therefore disallowed the deductions and sustained the negligence penalties, finding the taxpayers failed to make reasonable efforts to comply with tax rules or verify the propriety of the claimed deductions.

taxesbusiness & regulatory

In this U.S. Tax Court case, Ronald and Joan Knox challenged a notice of deficiency requiring them to repay $7,332 in advance premium tax credits (APTC) received in 2015 for health insurance purchased through the marketplace, plus an accuracy-related penalty (which the IRS later conceded). The Knoxes reported low adjusted gross income but had received substantial Social Security benefits, most of which they treated as nontaxable, and they did not claim or reconcile the credits on their return. The court held that they were ineligible for the premium tax credit because their modified adjusted gross income (including the nontaxable Social Security portion) equaled 461% of the federal poverty line for a family of two in Indiana, exceeding the 400% statutory limit under section 36B. As a result, the full APTC amount had to be repaid as additional tax liability, and the court lacked authority to grant equitable relief from the statutory repayment requirement.

taxeshealthcare

This case involved petitioner Suzanne Jean McCrory seeking Tax Court review of the IRS Whistleblower Office's rejection of 19 Forms 211 claiming awards under section 7623 for information about individuals allegedly failing to report taxable income from settlements or jury awards. The claims, submitted in two batches in 2018, were based on the petitioner's hypotheses drawn from publicly available information rather than specific, firsthand details. The parties submitted the consolidated cases for decision on a stipulated administrative record without trial. The court sustained the WBO's rejections, holding that they were supported by the record and were not arbitrary, capricious, an abuse of discretion, or contrary to law, as the claims were deemed speculative and did not identify credible tax issues warranting further action or awards.

taxesprocedure

This case involved a taxpayer who submitted 19 whistleblower claims to the IRS, alleging that various individuals failed to report income from settlements or jury awards, based on public information and hypotheses. The IRS Whistleblower Office rejected all claims, classifying them as speculative or not credible. The Tax Court reviewed the rejections under an abuse of discretion standard and upheld them, finding that the decisions were supported by the administrative record and complied with IRS procedures for evaluating such claims under sections 7623(a) and (b).

taxesprocedure

In this U.S. Tax Court case, petitioners Carl and Leila Gregory challenged IRS deficiencies for 2014 and 2015 arising from their boat chartering activity through a Cayman Islands entity treated as disregarded. The IRS determined the activity lacked profit motive under section 183, recharacterized reported Schedule C income as other income and expenses as miscellaneous itemized deductions (subject to the 2% AGI floor under section 67(a)), resulting in no allowable deductions for most expenses. The Gregorys moved for partial summary judgment, arguing that section 183(b) deductions for not-for-profit activities are not subject to section 67(a)'s limitation. The court denied the motion, holding that section 183(b)(2) deductions are miscellaneous itemized deductions under the plain language of section 67(b) and can coexist with section 183 without conflict.

taxesbusiness & regulatory

This case involved married taxpayers who petitioned the Tax Court after the IRS Appeals Office sustained a proposed levy to collect their unpaid 2013 federal income taxes. The taxpayers had requested collection alternatives including an offer-in-compromise, installment agreement, or currently-not-collectible status during their collection due process hearing but failed to submit required financial documentation despite opportunities to do so, including after a remand. The court granted the IRS's motion for summary judgment, holding that the settlement officer did not abuse her discretion in sustaining the levy because the taxpayers had not provided sufficient information to support their claims and did not properly raise certain arguments. The decision rested on the absence of any genuine disputes of material fact and confirmation that all legal and procedural requirements for the collection action had been met.

taxesprocedure